Seoul to Accelerate 2 Trillion Won Housing Promotion Fund... "Expected to Ease Supply-Demand Imbalance"

"Securing Business Feasibility and Continuing Construction with Low-Interest Loans"
Expectations for Resolving Issues in Youth Safe Housing
Mayor Oh Sehoon Announces Plan to Create 2 Trillion Won Fund Over 10 Years

As the Seoul Metropolitan Government is pushing for the introduction of the 'Housing Promotion Fund', there are claims that, if the fund is operated, it is expected to revitalize housing supply and also address issues such as the financial instability of operators that have appeared in youth safe housing.

On the 1st, the city held a forum to discuss measures to revitalize housing supply through the operation of the Housing Promotion Fund.

Kim Sunghwan, Senior Research Fellow at the Construction Industry Institute, who presented at the event, explained, "If additional supply becomes possible through the use of the Housing Promotion Fund, it is expected to alleviate future supply-demand imbalances," and added, "Utilizing low-interest loans from the fund will make it possible to secure business feasibility and continue construction work."

In addition, Jung Jongdae, Director of the Seoul Real Estate Policy Development Center, stated, "It is difficult to solve housing problems by supporting only low-income groups, and there are limitations to housing policies led by the central government," and emphasized, "The key is the financial resources that local governments can implement."

He continued, "The role of the Seoul Housing Promotion Fund is to be the first housing fund established by a local government nationwide," and explained, "It aims to support the construction of a private housing supply pipeline, support the entire process including land, construction, management, and operation, and provide housing that 80% of citizens can benefit from." He added, "We seek to achieve both public interest and expansion of supply," and clarified, "We are considering securing financial resources primarily based on the general account, that is, taxes, and gradually discovering resources such as cash contributions in lieu of development charges, but nothing has been finalized yet."

Previously, in June, Seoul Mayor Oh Sehoon visited Vienna, Austria to examine the public fund-based housing supply model and announced plans to introduce the Seoul Housing Promotion Fund. In Vienna, 40% of all housing is public housing, and most are fund-supported rental homes. In particular, through the independently operated 'Vienna Fund', long-term rental housing is provided to various income groups.

At a press conference marking the third anniversary of his inauguration held on July 16, Mayor Oh revealed his plan to create a housing promotion fund worth 2 trillion won over 10 years to accelerate the pace of housing supply. Mayor Oh said, "In broad terms, we can accumulate about 200 billion won per year and secure about 2 trillion won over 10 years," and added, "If this happens, we will be able to supply an additional 2,500 units per year on top of the amount we had planned to supply so far."

There are also claims that the establishment of the Seoul Housing Promotion Fund could facilitate the activation of youth safe housing. Youth safe housing refers to public and private rental housing provided at prices lower than the market rate in areas near subway stations and major roads for young people and newlyweds. Structural problems such as financial instability of operators, low rental profitability, and difficulty in recovering investments have been pointed out.

Lee Juhwa, CEO of Realtymate, stated, "By utilizing the fund, it will be possible to solve problems in the supply and operation process of youth safe housing and establish a sustainable circulation structure." She also suggested activation strategies such as full-scale introduction of fund-invested rental REITs, acquisition of youth safe housing using the fund, and expansion of support measures such as interest subsidies for construction financing.